PepsiCo, Coco-Cola and others strengthen operations in India as China stagnates

FMCG market in India: India has rapidly become focal point for major consumer goods companies like PepsiCo, Unilever, and Procter & Gamble, as se firms seek new avenues for growth amidst an uneven economic recovery in China. With India's economy currently expanding at fastest pace among major emerging markets, se multinational corporations are targeting country's diverse consumer base by launching a variety of new products tailored to local tastes and preferences.

Shift from China to India

Over past dece, global companies h concentrated ir efforts on Chinese market, which was seen as premier destination for growth. However, according to Brian Jacobsen, Chief Economist at Annex Wealth Management, next dece is likely to see a shift in focus towards India, where both demographic and economic factors are more favourable. "You have to go where demographic and economic tailwinds are at your back," he noted.

India's Consumer Market Potential

India, now world's most populous country, is expected to see a significant boost in consumer spending due to increased government expenditure, a promising monsoon season, and a rebound in private consumption. This growth is anticipated to elevate combined market share of top five multinational companies—Coca-Cola, P&G, PepsiCo, Unilever, and Reckitt—from 19.27 per cent in 2022 to 20.53 per cent in 2023. In contrast, ir market share in China is expected to decline slightly, reflecting challenges in Chinese market.

Corporate Strategies in India

To capitalise on this opportunity, consumer goods companies are making substantial investments in India. PepsiCo, for example, has introduced new products like Kurkure Chaat Fills, while Coca-Cola has upgred its packaging to extend shelf life of its offerings. Nestlé is planning to launch its premium coffee brand Nespresso in India by end of year. se efforts are paying off, with Coca-Cola's household penetration in India increasing by 24 per cent over past year, while PepsiCo, Nestlé, and Reckitt have also seen notable gains in market penetration.

Strong Market Performance

strong performance in India contrasts sharply with situation in China, where companies like Nestlé have reported declines in sales. economic and consumer sentiment in China has been "clearly weaker than expected," according to company. Similarly, or multinational firms are witnessing sluggish growth in Chinese market, which has tritionally been a key growth area.

(With Reuters inputs.)